Things started to get crazy overnight during the Asian trading session. It was during that period we learned that China's Flash (or preliminary) manufacturing purchasing managers' index unexpectedly fell to 49.6 in January from 50.5 in December. This was worse than the 50.3 economists were expecting. And any reading below 50 signals contraction. Economists noted that the numbers were probably noisy as the country prepares for its Lunar New Year celebrations. Still, this was a red flag for those fearing that the world's second largest economy may be slowing too rapidly. "We expect more soft data points ahead, as the impact of slowing credit growth seeps through to the real economy," said Societe Generale's Wei Yao.

Stocks tanked but managed to come off of their lows of the day. Bonds rallied sending interest rates lower including the 10-year Treasury note yield, which fell as low as 2.7571%. Meanwhile, gold spiked 1.9%, with the February futures contract settling at a two-month high of $1.262.30. The dollar tumbled.

The currency markets were ugly, particularly in the developing markets. The most violent move came out of Argentina, where the country devalued its peso. It fell 13% against the U.S. dollar. "Yesterday the central bank neither bought nor sold dollars, which tells you what its position is with respect to the exchange rate," said Argentina cabinet chief Jorge Capitanich via Reuters. This unexpected abandonment of interventionist monetary policy was clearly a big surprise to everyone.

The economic data out of the U.S. was mixed. Initial weekly jobless claims climbed to just 326,000 from 325,000 a week ago. This was less than the 330,000 reading expected by economists. However, this report may have been distorted. "According to MNI the Labor Department estimated claims for the District of Columbia and Kentucky, both of which were affected by the holiday-shortened week," noted Barclays' Cooper Howes.

Existing home sales in December climbed 1.0% to an annualized rate of 4.87 million units, which was lower than the 4.93 million unit level expected by economists. “We lost some momentum toward the end of 2013 from disappointing job growth and limited inventory, but we ended with a year that was close to normal given the size of our population," said Lawrence Yun of the National Association of Realtors.

Microsoft and Starbucks announce quarterly financial results after the closing bell. Follow the results live on BusinessInsider.com.